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Telstra plea for energy stability: right settings will spur investors

Telstra plea for energy stability: right settings will spur investors

Telstra has urged the federal government to keep policy focus on delivering energy stability, as the telco opts to go it alone and build a solar farm in northern Queensland to help power its network.

Telstra’s executive director of energy, Ben Burge, told The –Australian energy was a volatile commodity to which Telstra had a lot of exposure, given it ¬consumes close to 1 per cent of the total ¬energy market.

“Energy is no different to say currency or interest rates, and whether it’s Telstra or other corporates, it’s not unreasonable to think corporates should be taking more responsibility and control over managing that risk,” Mr Burge said.

“There is an opportunity here available to corporates, for them to take control rather than simply calling on ¬others to fix the problem.”

Mr Burge said for the government the best way to bring down costs was to let the market do its job and encourage efficiency around private investments.

“Policy stability is more ¬important than policy optimisation,” he said.

“A lot of the debate at the ¬moment has been around building a new system, new rules, or changes to the rules that would make a difference. We would say that actually having stability of policy settings is one of the most important things when it comes to encouraging investment.”

The move comes days after The Australian revealed that Telstra had warned the federal government its power costs had surged by more than $100 million in the past year, with the telco’s executives complaining about the harm inflicted on the telco’s ¬operations by spiralling power costs.

For Telstra’s part, it has entered into a long-term power purchase agreement with RES Australia to build a new 70 megawatt solar farm near Emerald in northern Queensland, and agree to purchase power over the long term that is the equivalent to powering 35,000 homes.

RES has done similar deals with Google, Microsoft and Apple in the US and powers their data centres with renewable energy.

“This deal has not been done in Australia before, and having the project located in Queensland factored into our decision also,” Mr Burge said.

The project, which will be funded by Telstra, is tipped to deliver 200 jobs.

Mr Burge said that in coming years Telstra would look to use the back-up electricity generation and battery-storage capacity in its network, to generate energy in times of peak demand to help ¬reduce blackout risks and offset high wholesale prices.

“Maintaining the resilience of our backup energy systems is a priority, but working with the grid to ensure the right balance of grid versus standby supply is something that’ll become more important over time,” he said.

The telco argues the move will help it lower its overall energy costs.

“We have a very large portfolio of standby energy capacity, and up until now those assets have not been used to participate in the wholesale energy market but we’ve initiated a program to commence that and we expect that to roll out over the next few years.”

Orica chairman and BHP ¬Billiton director Malcolm Broomhead warned Australia’s major ¬industries were being threatened “because of an issue we can ¬actually solve’’ but he urged greater investment in existing energy sources.

“There is a solution to ensure we get plenty of gas to bridge the gulf between where we are now and when renewables can do some more heavy lifting, when batteries become more efficient. But right now they are not. And we need more access to cheap ¬energy,’’ Mr Broomhead told The Australian yesterday.

“You can’t be paying two to three times as much for your gas here as we are in the United States and expect that not to affect things.”

Governments and businesses are awaiting a review of the ¬nation’s energy sector by Australia’s chief scientist, Alan Finkel.

RES Australia chief operating officer Matt Rebbeck said Telstra’s involvement was critical to the Emerald project, worth about $100m, getting off the ground.

“It is great to have been able to apply our global experience in long-term power purchase agreements to tailor the deal around Telstra’s requirements and enable new renewable generation to be brought online,” he said.

“This 160ha new solar plant will be one of the largest renewable energy sources in Northern Australia and will create jobs and economic opportunities in regional Queensland.”

Mr Burge said construction of the Emerald solar project would begin in the second half of this year, with electricity generation expected to commence next year.

He said Telstra would talk to local businesses and communities for potential local supply arrangements for the plant’s construction and operation.